Planning for Long-Term Care Costs in the UK
One in four people will need long-term care at some point in their lives, yet most do not plan for it. With average care home fees rising sharply, early financial planning for long-term care has never been more important.
In this guide
Long-term care is one of the largest financial risks most people never plan for. The assumption that family will provide care, or that the state will step in, leaves many families unprepared for substantial costs that can quickly deplete savings and assets built over a lifetime.
With average care home fees rising sharply in recent years, and means-tested state support available only to those with limited assets, planning ahead is not just sensible — it is essential.
The Likelihood of Needing Care
What is the chance of needing long-term care in the UK?
It is estimated that one in four people in the UK will need some form of long-term care at some point in their lives. With average life expectancy continuing to rise, the probability of needing care support increases significantly for those who live into their 80s and beyond.
Rising life expectancy means that more people are living into their 80s and 90s, and the likelihood of needing care — whether at home or in a residential or nursing setting — increases with age. Planning for this possibility in your 50s and 60s gives you considerably more options than waiting until care is needed.
How Much Does Long-Term Care Cost in the UK?
How much do care homes cost in the UK?
Average weekly fees for a residential care home in England have reached £949 per week, an increase of 19% since 2021/22. For nursing care, the average is £1,267 per week. Costs vary significantly by region, with the South East being the most expensive at an average of £1,457 per week for nursing care.
Care home fees have increased sharply over the past two years, driven by inflation in energy costs and successive National Living Wage increases. The figures from the LaingBuisson Care Homes Market Report make sobering reading:
- Residential care (average): £949 per week — up 19% since 2021/22
- Nursing care (average): £1,267 per week — up 18% since 2021/22
- Nursing care in the South East: average of £1,457 per week
- Nursing care in the North East: average of £1,073 per week (the lowest region)
At £1,267 per week for nursing care, someone in a nursing home for three years would face costs of approximately £197,000. This does not include additional personal expenses, activities, or specialist care requirements.
Private Payers vs. Local Authority Rates
There is a significant gap between what local authorities pay for care and what private individuals are charged. Analysis shows that self-funding residents are in effect subsidising the cost of care for those funded by the state. In nursing care, private-pay clients are charged an average of £1,409 per week — £263 more than the rate negotiated by local authorities.
State Support: What You Can Actually Expect
Many people assume the state will meet their care costs. In reality, state support is strictly means-tested.
In England, if your total assets — including your property — exceed £23,250, you are expected to fund your own care. Your home may be disregarded if a spouse, dependent child or qualifying carer still lives there, but in many cases it must be counted.
If you own a home worth £400,000 and have savings of £50,000, you will fund your own care in full until your total assets fall below the threshold. For many people, this means the family home may need to be sold to fund care costs.
Funding Options for Long-Term Care
There are several ways to fund potential care costs. The right approach depends on your assets, health, age and family situation.
- Immediate needs annuity: For those already receiving care, a lump sum payment buys a guaranteed income for life to cover care fees. The income is tax-free when paid directly to the care provider. This removes the uncertainty of how long care will be needed.
- Care fees insurance: Taken out in advance, this type of policy pays a benefit if you need long-term care. Premiums are lower when the policy is taken out at a younger age and in good health.
- Earmarked investment portfolio: Building a dedicated investment fund over time to cover potential care costs, allowing growth while maintaining flexibility.
- Equity release: Homeowners can unlock the value tied up in their property to fund care at home. This allows people to remain in their home while meeting domiciliary care costs. It is important to understand the long-term impact on the estate and take specialist advice.
- Family support: Some families choose to restructure assets between generations to help fund care. This needs careful planning to avoid unintended tax consequences or deprivation of assets rules.
Each of these options has specific tax implications and potential drawbacks. Professional advice is essential to identify the most appropriate solution for your circumstances.
How to Plan Ahead for Care Costs
The earlier you plan, the more options are available to you. Key steps to consider include:
- Review your assets: Understand the current value of your property, savings and investments, and what state support you might qualify for
- Assess your likely needs: Consider your family history of health conditions and what level of care you might eventually need
- Make or update your will: Ensure your estate passes to the people you want in the most tax-efficient way
- Consider Lasting Power of Attorney: Appoint someone to manage your affairs if you lose mental capacity — without this, your family may need to go to court
- Explore care cost insurance: Review what is available and the cost of premiums at your current age
- Talk to family: Open conversations about care preferences and finances reduce stress and misunderstanding later
Frequently Asked Questions
Will the state pay for my care home fees?
Only if your total assets, including your home in most cases, fall below £23,250 in England. Above this threshold, you are expected to fund your own care. The threshold and rules vary between England, Scotland, Wales and Northern Ireland.
How can I protect my home from care costs?
There is no simple way to shelter your home from being assessed for care fees, and deliberate deprivation of assets to avoid paying for care can result in the local authority still counting the asset. Proper estate and care planning, ideally many years in advance, can help preserve more of your estate within legal limits.
What is an immediate needs annuity?
An immediate needs annuity is purchased with a lump sum and pays a guaranteed income for life to cover care fees. The income is free of Income Tax when paid directly to a qualifying care provider. It is designed for people who are already receiving care and removes the risk of outliving their savings.
Important Information
This article is for general information only and does not constitute financial advice. Care funding rules may change and depend on individual circumstances and location. Equity release is a complex area and independent advice should always be sought. Off Piste Wealth is authorised and regulated by the Financial Conduct Authority.
For a complete overview of financial planning before the tax year ends, read our tax year end planning guide. You may also find our article on investing an inheritance relevant.
Get in touch with Off Piste Wealth to discuss long-term care planning and how to protect your financial future in later life.